Environment Editor, The Sydney Morning Herald

Australia's carbon emissions from the power sector are continuing to slide but the savings are being negated by a surge in diesel consumption as mining investment peaks.

Coal-fired power plants supplied 74 per cent of power to the National Electricity Market in May, with renewable energy sources, such as hydro supplying 13.2 per cent and gas the remainder, according to monthly research by consultants Pitt & Sherry.

Wind energy passed 4 per cent of the NEM supply for the first time, while hydro's share at 9.2 per cent was the most since Tasmania joined the market in 2005.

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Total emissions from energy overall for the year to March were 2.7 million tonnes lower than at the end of 2012, and almost 9 million tonnes lower than for March 2012, according to the CEDEX report.

The drop in emissions from the power sector started prior to the introduction of the carbon price last July, in part because people began preparing for higher prices and began cutting back, Dr Saddler said.

The closure of the Kurri Kurri aluminium smelter in NSW last September has also knocked power demand lower. Power demand in the NEM is now at levels not seen since October 2004, he said.

Bulk diesel demand, typically for the mining sector, has jumped in the past two years in Queensland and WA, with little demand growth in the rest of the country. That consumption growth as increased carbon emissions by 5.5 million tonnes over the two years to March, CEDEX reported.

The average emissions intensity of the NEM has dropped for the past 15 months. In May, most of the reduction came in black coal-fired plants in Queensland, with NSW generation little changed, Pitt & Sherry said.